Are you someone who buys a new car every few years? If so, have you really thought about the cost of purchasing a new vehicle every three to five years? I’m talking about a purchase, not a lease, so I’ll be concentrating on that. The car I’m driving is a 2016 and hubby is driving a 2008.

Let’s start with the pros of keeping your car longer, say for 7 or more years. As you’re probably aware, you take the biggest hit on depreciation the second you drive a brand-new shiny car off the lot. And, you’re hit with the most depreciation in the first 3-5 years. Keeping your vehicle longer allows you to avoid constant depreciation and sales tax losses. And of course, once you have paid it off, you can start putting your monthly payment away for repairs and/or your next car when you actually need one. One more thing, as the car ages, your insurance costs decrease. And did you know that even with repair costs, your ownership is less expensive than buying a new car?

On the other side, you will encounter more repairs as your vehicle ages. And while your repair costs aren’t foreseeable, they’re normally less expensive than a new car payment. I had to replace my tire sensors this year for less than $250. I’d like to see you have a car payment for that. As I’ve said, hubby’s car is 8 years older than mine. He doesn’t have heated seats or a back-up camera, and his isn’t as luxurious as mine. But he didn’t pay much for it when he purchased it 10 years ago. He only paid $5,000 when he bought it used and while he’s put money into it over the years, he hasn’t spent nearly what a new one would have cost. And, he’s put 100,000 miles on it. Is the body starting to go? It sure is, but he doesn’t care.

Moral of the story:

So, are you one who buys a new car every 3-5 years? Keeping your vehicle at least 10-12 years, is normally the most cost-effective approach. We plan to keep ours until the wheels fall off.

If you’re one that trades your car in every few years, ask yourself why. Is it because you like having a new car? Is it prestige? Is it enjoyment? It’s definitely NOT for financial maximization. Pay your car off and save your payment going forward. That’s the smart choice.